Bangkok--17 Jul--SCB
SCB ANNOUNCES RECORD SECOND QUARTER NET PROFIT
Second quarter Net Profit at Baht 14.7billion, a 16.4% increase
Today, Siam Commercial Bank (“SCB”) reported its second quarter net profit at a record high of Baht 14.7 billion, an increase of 16.4% year-on-year and 12.1% higher than the first quarter. This strong growth in net profit was attributed, in part, to a substantial investment gain and, in part, to the successful implementation of SCB’s core strategies for 2014, namely, to substantially reduce its cost of deposits, curtail growth of operating expenses, and increase fee income. Although, like the sector as a whole, loan growth during the quarter was somewhat stagnant, asset quality has remained remarkably stable. At the same time, SCB reported a record net profit of Baht 27.9 billion for the first half of 2014, a 8.1% increase from the first half of 2013.
Dr.Vichit Suraphongchai, Chairman of the SCB Executive Committee, stated that “the record results in a very challenging economic backdrop speak to the appropriateness of the Bank’s strategies and the rigor of its execution. At the same time, the impressive results attest to the competitiveness of the Bank’s franchise and its strong positioning in a volatile and uncertain economic environment. As the economy starts to recover in the second half the Bank expects to seize the opportunities that emerge”.
In the second quarter, net interest income rose by 14.0% year-on-year largely as a result of lower interest expenses on deposits following the Bank’s announced strategy to reduce the cost its deposits relative to its peer group – a strategy which was facilitated by the lackluster loan demand during the quarter.
The Cost to Income Ratio dropped to an impressive 35.1% from 38.0% recorded a year earlier, as income growth exceeded the growth in operating expenses. This improvement in operating cost was enabled by a unrelenting focus on containing the growth of discretionary expenses through better deployment of resources and use of more cost-efficient practices for procurement and operational processes.
Non-interest income increased 10.9% year-on-year mainly from the substantial gain from the divestment of the Bank’s 60.86% holding in Siam Commercial Samaggi Insurance PCL and higher net fee income, despite the reduction in loan related fees.
Despite strong headwinds throughout the quarter, portfolio loan quality was stable during with NPLs at 2.11% - about the same level as the first quarter. Also, loan loss provisions of Baht 3.2 billion were set aside during the quarter to maintain the provision coverage ratio at a robust 141% of NPLs.
Commenting on the results, Khun Kannikar Chalitaporn, President of the Bank, said that “what is truly noteworthy is that for the past 16 consecutive quarters, SCB has delivered year-on-year increases in operating profits (excluding exceptional items) despite a very volatile economic landscape that is characterized by intense competition. It is this consistency and sustainability of performance that has now become the hall mark of the Bank, attracting in turn loyal customers, supportive shareholders, and talented staff together with serving as a role model of a socially responsible corporate citizen in our community. . Our aim is to continue to build on this brand promise so that SCB is the Bank of Choice for all its stakeholders”.